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How to install DirectX 9
DirectX Install
Istaria uses DirectX 9. While newer versions of Windows have built in compatibility for DirectX 9, Istaria requires a real install (instead of compatibility). Please visit Microsoft and download the June 2010 version of DirectX 9

Alternatively, you can download directly from the patch server. 
DirectX Bypass
If you're having issues installing DX9 you can bypass the requirement by logging into the launcher, clicking the Troubleshoot button located at the bottom of the launcher and then unchecking "Use DX9 Shaders"